Part 1: Plight of U.S. Workers

Jul 31, 2023 | Macro Insights, No Bull Economics

Corporate Profits vs. Wage Growth Graph

OK, let’s start by clearly stating that we are totally in favor of free markets and proponents of an efficient, limited government. However, it is very apparent from this chart that U.S. businesses need to do better for our labor force so that we can eliminate any arguments to reset our economy.   

Commentary

  • Using 1982 as our start date, we compare growth indexes for GDP, corporate profits, wages, and CPI (inflation). It is clear to see that wage growth has badly underperformed all the other indexes, leaving ordinary Americans farther behind.
  • Let’s remember that 68% of our GDP is driven by consumer spending which, in turn, is driven by wage growth. There is good reason to seek ways to drive higher wages so that our service-based economy can grow larger & more profitable.
  • Of course, the answer to this problem is not to increase wages to some random dollar amount (like $15/hr because this is a nice-sounding number). Rather, we must find ways to improve worker productivity so that we can increase wages & profits (win/win).
  • This requires a hard look at our educational system – we must ask the hard question of why all this money spent to educate our youth is failing the labor force so spectacularly. Nothing against the liberal arts, but Americans need to learn how to innovate and build businesses for themselves. We need a nation of self-empowered entrepreneurs who are trained to create wealth. This must become a national priority!  
Corporate Profits and Wage Growth Graph
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